Bunge Emphasises Higher For Longer

The Riksbank's Bunge's discussion with SEB on "The Economic Situation" covered familiar topics, but saw the Riksbank's "higher for longer" policy path to be communicated more strongly than previously.

• Most notably, Bunge stated that rates would not be cut if "inflation was around 3-4%". Bunge joined Breman (last week) and Thedeen (in the September MP press conferences) in explaining that the Riksbank's rate path resembles a "Table Mountain" (vs a Matterhorn).
• When asked whether the risk of a wage-price spiral was nullified thanks to reasonable 2-year wage agreements, Bunge noted that monetary policy today must continue to be tight to ensure the next round of wage agreements don’t come in at a level that re-accelerates inflation.
• She stated that the Swedish economy and labour market has performed stronger than expected, and households likely have some savings buffers remaining (though granular data on this is not available).
• Bunge explained that Sweden's interest rate sensitivity (due in part to a large proportion of floating rate mortgages) means the pass-through of monetary policy is likely faster than the 1-2 years usually quoted.
• When asked on QT, she did not strongly commit to a stance for future meetings, while comments on the krona were in line with previous Riksbank communications.
• EURSEK gained ~0.1-0.2% during the speech, but this was more likely driven by global flows rather than comments made, with NOKSEK broadly flat during the period.